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LinkedIn vs. Instagram: Are Ad Changes Foretelling the Future?

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First believed to be nothing more than a fad, it’s clear that social media is here to stay. But which platforms will prove their longevity, and which will go the way of MySpace? Which will evolve far beyond their original intended use, the way Amazon’s online bookstore eventually became the most powerful online force in retail? Perhaps most importantly, which will be the most important platforms to take advantage of for brand visibility, offering brands the most innovation and the greatest opportunities?

It’s hard to look further ahead than a year since the game changes so quickly, but a pair of announcements from Instagram and LinkedIn, respectively, could foretell the potential for each company’s growth and development.

LinkedIn Shutting Down External Ads

Last year, LinkedIn decided to take advantage of its deep knowledge of personal information to sell ads to people outside the social network. Now, after less than a full year of development, it’s shutting down that wing of operations.

What happened? According to CFO Steve Sordello, the company is going to miss out on an estimated $50 million in revenue by closing this portion of advertising down. That may seem like a lot, but evidently, the costs of managing and developing this side of the business were too much to break a fair profit. Over the course of the past year, its total ad revenues grew by over 20 percent—yet this new sector seems mostly responsible for that, accounting for 21 percent of the company’s total ad revenue.

All these numbers sound good—high dollar amounts, growth in ad revenue, etc.—but the company isn’t in great shape. In the fourth quarter, the company sustained an $8 million loss, prompting a downward spiral in its stock price.

The Future of LinkedIn

What does this mean for the future of the social media platform?

Despite some fourth quarter losses, the company is still in good shape. Users are pleased with the platform, and LinkedIn firmly remains the only popular product serving the “professional” niche in the social media realm. It doesn’t have many competitors vying for user attention, and it’s sponsored ads are both profitable and growing.

LinkedIn

(Image Credit: LinkedIn)

Still, it’s possible that LinkedIn has painted itself into a corner. By only targeting skilled professionals, LinkedIn has evolved into a glorified job board more than an actual social media site. Groups are alive with discussion, but there isn’t nearly as much interaction between users as on platforms like Facebook or Twitter, and it doesn’t carry the youthful energy of newer platforms like Instagram and Snapchat. Because it doesn’t have many directions in which to evolve, LinkedIn is stuck where it is—which isn’t exactly a bad thing.

Bottom Line: If you’re currently taking advantage of LinkedIn for content syndication, hiring, or HR-related tasks, you can count on it sticking around for a while. But don’t expect any radical or game-changing innovations on this front.

Instagram Doubles Down on Video Ads

Now, let’s turn our attention to Instagram, which recently announced that they’ll be opening their feeds to 60-second videos. For a platform that was once known exclusively for their commitment to still photo taking and sharing, this is a step in a bold new direction.

Montley-Fool-Instagram

(Image Credit: Motley Fool)

Instagram has enjoyed a thriving growth pattern for the past several years, and is expected to hit 500 million users this summer. Users have taken well to videos, and the platform’s response of introducing longer potential video ads is an indication of that. However, Instagram faces a critical disadvantage in rolling this feature out: there are already tons of video-based mobile apps (YouTube, Periscope, Meerkat, and Vine are just a few, not to mention integrations in Facebook and Twitter).

The Future of Instagram

It’s hard to tell exactly where Instagram is going with this. The fact that it’s expanding its horizons is a sign of its confidence and willingness to evolve, but video content isn’t exactly a game-changer. Thanks to its steady acquisition of new users, this could be the app moving toward a more “general” service (and a more “general” demographic; a significant percentage of Instagram’s user base is young and female). If that’s the case, more marketers would have a new way to use the platform and substantially benefit.

In any case, Instagram is still a very young platform, and has a lot of room to evolve beyond its current demographic limits. Unlike LinkedIn, which doesn’t have much room for growth, there are a number of unknowns about the potential future Instagram could carve. Like its contemporary platform SnapChat, Instagram could easily depart from its original directive and serve a larger user base while doing so.

Key Takeaways for the Social Media Marketer

If you’re reading this hoping for some clear direction on what to do on LinkedIn and Instagram, I’ll summarize the main things you should take away:

  • LinkedIn isn’t likely to change anytime soon. This could be good or bad for you, depending on how you hope to use it.
  • LinkedIn isn’t advancing much in the advertising or “customer reach” fronts.
  • Instagram is poised to evolve in significant new ways. This includes new mediums, new demographics, and a wider user base.
  • Instagram is about to become more approachable. If you’ve ever been interested in using the platform for your brand, now’s the time to make the transition.

That being said, social media changes quickly, so don’t take anything for granted, and always be ready to turn on a dime.

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Timothy Carter

Timothy is AudienceBloom's Director of Business Development. He combines expertise in online marketing with a passion for helping others build a strategy for success. When not planning his next trip to Hawaii, he's writing at his personal site, OutrankLabs.com.

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